Boeing shares rise on hopes strike will end

Workers aim for 38% wage increase; two previous proposals rejected

SEATTLE:

Boeing shares gained 3.5% on Friday on speculation that the plane maker's US West Coast factory workers will approve a new wage offer and end a seven-week strike that has halted jet production and hampered the company's finances.

Around 33,000 machinists, who have been on strike since September 13, will vote on Monday on a new contract offer raising wages by 38% over four years, up from a prior 35% offer.

The proposal adds a $12,000 ratification bonus but did not meet workers' demand for the restoration of a defined-benefit pension. Boeing workers rejected two previous proposals in votes on September 12 and October 23.

"It looks promising since it is approaching the union's original target of a 40% wage increase over four years. The fact that the strike has lasted almost two months is also a factor in favour of a deal," said Ben Tsocanos, aerospace director at S&P Global Ratings.

Boeing CEO Kelly Ortberg urged workers on Friday to accept the deal, saying in a note to staff that it was time to "focus on rebuilding the business and delivering the world's best airplanes".

Workers were divided, with some telling Reuters they were ready to end the gruelling strike and others determined to hold out for the full 40% wage increase. The strike has halted production of Boeing's best-selling 737 MAX jets as well as its 767 and 777 widebodies, leading to a $6 billion loss in the third quarter and complicating Ortberg's turnaround efforts.

"The proposal's economics are a material improvement for labour. Union leadership's endorsement, unlike the most recent proposal, should help further bridge the vote towards ratification," said Dino Kritikos, managing director at Fitch Ratings. Workers have lost an average of $10,400 in wages during the strike, eclipsing the average first year pay rise under the offer, Kahyaoglu said. She said Boeing's recent capital increase puts it in a stronger negotiating position.

Its shares have fallen 8.3% since the strike began in September.